Wells, Chase Race to Match Counseling Availability With Demand

Face-to-face mortgage counseling is by industry consensus the most efficient way to prevent foreclosures. The problem is that the number of those who could benefit from this type of counseling, those who are trying to and those who actually show up to meet with the lender are not always a match.

When the crisis started distressed borrowers were not aware of or would shy away from various types of assistance available to them, including counseling that leads to more affordable, investor sensitive, often on-the-spot loan workout solutions.

Now the tables may have turned. Some of the country’s largest banks are seeing the need to expand outreach through national events and new counseling centers.

Joe Ohayon, SVP with Wells Fargo Home Mortgage Servicing, told this publication that since workshops designed to assist borrowers in hard-hit markets “have shown a great deal of success,” in 2011 Wells plans to bring its home preservation project workshops to 20 hard-hit communities coast-to-coast.
“Wells will continue with this aggressive foreclosure prevention outreach using both traditional and face-to-face contact,” he said, noting that the megabank continues to rely on traditional outreach such as phone calls, letters and e-mail in addition to face-to-face contact as a way to give options to customers seeking help.

Earlier this month JPMorgan Chase reported this year it plans to add 25 new homeownership preservation centers in the hardest-hit communities in 19 states.

Chase also said the goal is to “dramatically expand” its nationwide outreach and assist “as many homeowners as possible.”

This investment helps double the megabank’s borrower outreach power bringing the total number of active Chase Homeownership Centers to 76 and helps expand services into 27 states including the District of Columbia.

It is, however, not so easy to calculate how many distressed borrowers will be able to preserve homeownership thanks to these centers opened by Wells and Chase or other banks—compared to the total number of borrowers in need of one-on-one counseling.

The mismatch appears to be the fact that while awareness and interest in improving lender-borrower communication is high and coming from both sides, it is unrealistic to expect that all distressed borrowers whose chance to avoid foreclosure would be significantly increased by face-to-face counseling will be able to actually get it.

To put things into perspective, according to the Lender Processing Services Mortgage Monitor report, by the end of December the number of loans 90 days of more delinquent but not yet in foreclosure was 2.1 million and over one-third of these borrowers have not made a payment in over one year. Another 6.9 million loans are nonperforming and in some stage of foreclosure.

Ohayon says data show that contact is important. For example, seven out of 10 customers counseled by Wells were able to avoid foreclosure, whereas the ratio among customers who do not work with a counselor but “go down the path of self-cure to avoid foreclosure” drops to four out of every 10 customers.

Wells offers borrowers who are experiencing challenges with their mortgage payments the option to attend a one-hour face-to-face counseling session with a workout/home preservation specialist in a private and confidential setting where homeowners bring required financial documents such as income statements and discuss the specifics of their individual case.

And this target counseling process has had a very high success rate.

One of the benefits of the home preservation model is that it engages technology that allows experts to make quick decisions. On average Wells has been able to make on-the-spot loan modification decisions, offering an alternative to foreclosure to 25% of the customers. Also on average a week after attending the workshop about 50% of customers receive a decision.

Wells data show that consistently and starting at the first one-on-one counseling event organized in September 2009, a workout option was offered to two of every three customers who attended. (Most of those workouts are modifications both HAMP and non-HAMP.)

This year Wells Fargo & Co. has scheduled 20 home preservation workshops in hard-hit markets around the country, up from 16 sessions in 2010.

The bank initiated this year’s national campaign by inviting thousands of homeowners from the New York area to attend a one-on-one consultation event. Bilingual representatives for Wells Fargo Home Mortgage, Wells Fargo Financial, Wachovia Mortgage and Wells Fargo Home Equity were available to assist borrowers facing financial hardships and at risk of foreclosure.

As of now Wells operates eight primary service phone centers, nine dedicated Home Preservation Centers that also are phone centers, and another 27 brick-and-mortar Home Preservation Centers where Wells staff work one-on-one with homeowners on an appointment basis.

The key is to help as many people in hard-hit markets as possible as fast as possible, he says.

However, wehn asked how big of a challenge is such a goal is given the size of the demand, the executive said, "it is not that hard to do,” because going into these hard-hit markets and providing the opportunity to meet face-to-face “is really another means of outreach.” Some customers “prefer to go through a more traditional path,” others prefer a face-to-face individual situation option.

Ohayon says the 16 events in 2010 were so successful that the company decided to have an additional 20 this year in the hard-hit markets.

Both Wells and Chase are intensifying their local market focus strategy. Ohayon says Chase branches are similar to Wells Fargo’s home preservation centers.

In 2011 Chase plans to open counseling centers for the first time in 12 states: Connecticut, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, North Carolina, Oregon, Utah and Wisconsin. Plus, it will add centers in California, Florida, Illinois, New York/New Jersey, Texas and Washington.

Upon the announcement, David Lowman, CEO of Chase Home Lending, said the effort is based in the belief that the best way to help borrowers find ways to stay in their homes “is to sit down face-to-face and discuss their individual circumstances.”

So far these centers have proven to be an effective way to educate borrowers and customize solutions, executives said, the hope is the initiative will “help keep thousands more homeowners in their homes.”
Chase data show 120,000 customers were counseled at its existing 51 centers—open six days a week—since 2009. An additional 61,000 borrowers were contacted during 1,082 borrower outreach events.

This year Chase plans to host at least 32 multiday events across the country.

Multilingual counselors serve as a single point of contact that help Chase customers understand the full range of options available including mortgage modification applications, finalizing and signing, and document collections. Modification customers have access to 2,000 relationship managers.